China Bans Some New Coal Power Plants – China Real Time Report – WSJ

China’s government is banning construction of new coal-fired power plants in areas with surplus power supply, a move that could weigh on already-struggling coal markets. As WSJ’s Brian Spegele reports:

The new measures outlined Monday by China’s top economic planner, the National Development and Reform Commission, underscore the central government’s deep concern with overcapacity across China’s economy, a result of weakening industrial demand as growth slows.

Beijing has previously said it aimed to curb thermal power overcapacity; analysts said the fact that it now came from an official NDRC communiqué was the clearest signal yet that it won’t tolerate new coal capacity in regions that already have excess supply.

Weaker demand for coal inside China could ultimately lead to higher exports, which would exacerbate the huge supplies of coal sloshing around global markets. The higher supplies could drive down global benchmark prices and hit the bottom lines of major U.S. and international coal producers.

The global commodities downturn has proven particularly tough on global coal companies. St. Louis-based Peabody Energy Corp. and Arch Coal Inc. are among the large U.S. miners to file for chapter 11 bankruptcy protections in recent months. The U.S. sector has shed 31,000 jobs since 2009.